The demand for a product is unit elastic. At a price of $20, 10 units of a product are sold. If the price is increased to $40, then one would expect sales to equal:
A) 20 units.
B) 10 units.
C) 5 units.
D) 0 units.

Question

Quizplus · Accepted Answer

When demand is unit elastic, the percentage change in quantity demanded is equal to the percentage change in price. Doubling the price from $20 to $40 (a 100% increase) would result in a 50% decrease in quantity demanded, from 10 units to 5 units.

The Demand for a Product Is Unit Elastic